CA Final · Financial Reporting · Hedge Accounting

Meridian Textiles Ltd applies hedge accounting to forward contracts hedging forecast export sales and to interest rate swaps hedging its floating-rate borrowings. In preparing disclosures about the effects of hedge accounting, how should the entity determine the risk categories by which it separates the information?

Risk categories are determined from the risk exposures the entity chooses to hedge and for which it applies hedge accounting, and the same categories must be used consistently across all hedge accounting disclosures. They are not based on instrument type, balance sheet line or segments.

1. AOn the basis of the risk exposures it decides to hedge and for which hedge accounting is applied, applied consistently for all hedge accounting disclosuresCorrect
2. BOn the basis of the type of hedging instrument used, and it may change the categories for each disclosure
3. COn the basis of the line item in the balance sheet in which the hedged item appears, chosen separately for each table
4. DOn the basis of the entity's reportable operating segments, as these determine all risk categories